Monday, August 31, 2009

This Week's Sign of the Apocalypse

I saw this in the grocery store today:

I mean seriously... What is our society coming to when one useless leech who is "famous" only for having 8 kids she can't afford because she really really "wanted" them is criticizing another useless bitch who is famous only for being a total hag and letting TV cameras come into her house and make a mockery of her child raising? But to answer InTouchWeekly's question - Octomom is definitely worse.

In other news, one of the big stories today is the NY Times propaganda trumpeting the massive "gains" the government is making on the bailout process. The FT also ran a story bloviating about profits from the rescue programs. Both have been dissected by multiple sources already (NakedCapitalism, Denninger,) but I thought Barry Ritholtz's explanation of the truth was the simplest.
"Looking just at early TARP repayments means that we are ignoring a) the rest of the TARP; and b) the majority of other expenses, guarantees, loans capital injections, and outright spending that has taken place."
One thing is for certain - the past 9 months have given us the most remarkable propaganda campaign the financial press has ever seen. Every headline is mandated to be spun positively, regardless of the degree of misquoting that takes place.

I looked at one blatant example of this when Nouriel Roubini was viciously misquoted a few months ago, but you can see it almost every day with the press touting how everything is getting better because we merely lost 540,000 jobs last week, which is much better than losing 700,000 jobs. Tell that to the 540k newly unemployed. Similarly, when the number of continuing jobless claims decreases, the press spins it positively. I was one of the first to anticipate this phenomenon back in early June when I wrote about people exhausting their unemployment benefits.

Last week, I was raising an eyebrow when the mainstream media headline was "Meredith Whitney: "Fears of bank solvency are behind us." Now, reading that quote, you'd think Whitney was bullish right? But that would be hard to believe, so then you go watch the video. What Whitney actually said was:

"We are early on in terms of bank closures"

"We estimate there will be over 300 bank closures (there had been 78 so far)"

"The small business owner on main street continues to see liquidity come away from him"

"Spending is going to take a long time to come back"

"I don't expect consumer spending to come back anytime soon"

Obviously, she wasn't bullish. Look - you can't cure the economy by lying to the people to foster confidence. This is a tough realization for economists, because they are used to confidence being a main driving force in the economy. If people think things are ok, they borrow more and spend more, which in turn is a self fulfilling prophecy to MAKE things ok. The problem is that currently, confidence matters less than ever, because even if the consumer has confidence, he doesn't have money, the capacity to take on more debt, or a job. You can't spend confidence.

Lest someone accuse me of whining without solutions, I'll remind you of the proper solution: RECOGNIZE bad debt instead of continuing to pretend it will work itself out eventually. Stop funding insolvent institutions and use those funds to seed new, healthy banks instead. We have a capital structure in place where there are rules about what happens when a company loses lots of money: first the stockholders take the losses, then the bondholders take the losses. The taxpayer does not fall anywhere in that hierarchy - CERTAINLY not before the bondholders and stockholders! Bank bondholders need to restructure debt to recapitalize the banks - just like the auto manufactures did.


Thursday, August 27, 2009

Vegas - Summer 2009: To the FELT! Part III

If you missed Part I or Part II, go get yourself caught up.


Leeroux woke up early and hit the airport for his flight home. Rico and I slept in for another 90 minutes, and then headed to the pool to wait for Big Show & Tubbs to rise from the dead. When they finally crawled out of bed, we headed over to the Grand Luxe with J and Connor for some breakfast. I had a topic of conversation for breakfast, and I explained my theory to the table. I'd always thought that Vegas was an American fantasy land - a place where people could go and act like they can't act at home - be someone else - do what you don't normally do. Guys come drink their balls off, girls act and dress like total whores, people spend money on completely stupid shit like $180 steaks and $450 bottles of Vodka and generally act like morons. VEGAS BABY!

However, it had just hit me, suddenly, that this wasn't a fantasy land - this was REALITY. This was the uber REAL America - douchebag rednecks walking around with a hollow plastic guitar filled with frozen margarita around their neck. Fucktards gambling away their rent at 6:5 blackjack tables without the slightest regard to the better odds at the next table or the next room. An endless parade of chooches who wear sunglasses inside with their tilted trucker hats and Ed Hardy shirts. Fat whales with no sense of personal space who walk right at you in the middle of the sidewalk, then stop and look up. Other fat whales stacking their plates with disgusting frozen shrimp cocktail and dirty king crabs legs from the all you can eat buffet. The one thing that really confused me though was the whore gene that seems to really blossom in the ladies in Vegas. What is it about Vegas that makes women wear butt-cheek length skirts and tight scooping satin shirts with no bras? Rico had a theory on that, explaining that this is how the girls actually were - but that they didn't have the opportunity to express their sluttitude in their little home towns. "If they had clubs like this in Podunk, USA, they'd act like whores there too," Rico elaborated. I couldn't shake the epiphany - that Vegas was the Real World - not an escape.

Anyway, after breakfast me and Big Show sat down at the quarter double deck blackjack table in the Palazzo outside the high limit salon. I got another channel check when, while waiting for my marker, I asked the pit boss, "How's business been?" "Slow," she replied. "Slow since the summer? Or slow all year?"

"Slow since we opened, eighteen months ago," she explained. "Write that down," I told Big Show, "and buy some LVS puts."

We battled for almost 4 hours at the bj table, where I managed to almost break even, and Big Show racked up a nice win. Neither of us could rival the blackjack MACHINE who sat down in the one seat and turned $500 into $5500 in 2 hours with an absolute clinic in how to spike blackjacks. We also got lessons in the fine art of hitting a 14 against a dealer's 6, and staying on 16 against a dealer's 7 from a doucheball who sat down for a brief period between us. Needless to say, he didn't last long.

I pulled another hundo out of my pocket to round up my buy-in so I could buy back my marker, and my streak of still not having cashed out any chips at the cage was intact. Big Show and Tubbs were heading to the airport - we said our goodbyes, complete with man-hugs, and I was on my own. I still had 5 hours to kill before my red-eye flight home, so I figured I'd crush it in the Venetian poker room a bit. I put my name on the 2-5NL and 5-10NL lists, and then asked to be added to the Omaha list as well - they had a 4-8 limit game with a half kill. "There's a seat in the pot limit omaha game," the floorperson told me. "ooooh.. PLO? I'll take it," I said, and found the 1-2 PLO game off to the side.

I put a rack of red chips on the table, and ran to the bathroom. When I came back, my chips were gone. "What happened?" I asked, as the table feigned innocence. "You took them with you," and old guy next to my seat claimed, but he quickly lifted up the bag he had on the side cart to show that he was just fucking with me, and my rack was on the cart. Now, obviously, I couldn't let the locals get to me, so I just looked at him, smiled, and asked, "Do you know who the fuck I am?" They did not. The game was 1-2 blinds, but the bring-in is $5, and the max first raise is to $15. The blinds are considered $5 each for purposes of counting the pot, and the max buyin is $500. Surprisingly, the game was SUPER nitty, as I'd soon find out.

After 45 minutes, I checkraised a guy all-in on a K-4-3 flop with two spades, holding the 5-6 and a ten high spade draw. He agonized for 4 minutes, asking "If I call can we run it twice?" "No. One time," I told him, and he went back into the tank. He tried BEGGING me to run it twice, but I laughed and said ONE TIME, which resulted in him folding after another minute of agony. The game was so nitty that it should have made it easy for me to not make asinine river payoffs, but donkey river payoffs are the staple of any NLHE specialist playing PLO. I made a great call on one hand when I correctly deduced that my opponent could not possibly have a monster hand the way the hand played out (the flop was checked around, I potted the turn - he called me on the button, and then he bet 1/2 pot on the river when what looked like a brick hit and I checked it to him). I was right - he had nothing much until he hit his gutshot on the rio to make the nuts. Then I flopped the nuts with AKxx against the tightest guy at the table who flopped top set. He bet the flop, which I called. He check-called the 7 on the turn, and I should have snap mucked when the river paired the 7 and he bet out. I didn't. Cause I'm a hold'em donkey. That one was bad.

In one hand, action was checked around on a paired flop, and again on the turn. The river brought a ten (4-4-6-8-T with three spades) and the SB led out for the pot. The button smooth called with pocket tens, and I jumped out of my seat. "HUH? How can you not put in a raise?" I was incredulous. "I've seen quads too many times," was the reply - and this guy was no fool. "You'll learn," another one of the nitty locals told me, and I laughed at their nittitude. You have to understand, in my game in the city, I'm the nit of all nits, but this was out of control. The river bettor had pocket 8's, for the third nuts.

As you can imagine, the session ended with me getting stacked again - when my combo straight + flush draw missed against top set, and I wished the table good luck, taking no solace in the fact that my perfect streak of not making it to the cage had lasted the entire trip. I fetched my bag from the valet at the Mirage, and headed to the airport. My cabbie pulled a highly advanced move to get us out of a major gridlock jam on the Strip - turning into the IP entryway and sneaking out the back way, weaving down the backroads back to the airport. He explained to me that sometimes people think he's taking them for a ride when he takes shortcuts like that, but I responded that I knew what was up, and that I wouldn't complain unless he tried to take me on the highway, in which case I'd choke him out from the backseat.

I always used to fly US Airways, since they allow you to purchase an upgrade to first class for $100 if it's available the day before your flight. However, US Airways pulled all of their direct flights to Vegas from both Newark and JFK, so I was on Delta this time. Out of habit, I approached the gate desk and asked the guy if there were any first class seats available. He told me that I could have one for $150. "I thought you didn't sell them?" I was surprised, but he explained that he was overbooked in coach, so he'd let me buy an upgrade cause he needed my coach seat. "But, if you're overbooked, you can give it to me for free, right?" I tried the last angle in my arsenal. The pro was not impressed, explaining that if he was going to give it away, it would probably be to someone with a higher fair or higher frequent flier status than me. I quickly handed over my credit card, and was on the plane in my first class seat 5 minutes later when we started boarding. I got a jackpot bonus when the plane was a Boeing 757-300, with massive first class seats which reclined and adjusted 6 different ways. I couldn't even touch the seat in front of me.

I leaned back, put on my ipod, and drifted into dreams of the next trip to the desert.


Sunday, August 23, 2009

Vegas - Summer 2009: To the FELT! Part II

Where were we? Oh yes... Part I ended with me crawling out of bed Saturday morning, still drunk, laughing at a text from the Big Show inquiring simply: "How did we get home?"

After showering up, Rico, Leeroux and I hit the Mirage buffet for some fuel. I noticed a quite bearish channel check - the Mirage no longer serves fresh squeezed OJ at the buffet, they now serve crappy diluted concentrate, like you get in the frozen foods section. I lamented this downgrade, but enjoyed a melange of breakfast pizza, Chinese dumplings, sausage and breakfast burritos. After the buffet, Rico and I found seats at the pai gow table outside the Mirage poker room to kill time while waiting for the rest of the slackers to rally, as Leeroux returned to the room to catch another 90 minutes of beauty sleep and "watch the golf tournament." I still had $375 in chips from the previous night's pai gow session, which I promptly put in play. Tubbs and Big Show stumbled through on their way to breakfast at Carnegie Deli. Tubbs had procured shirts for all of us to wear in honor of the Big Show, and distributed them promptly:

The color was a blinding fluorescent yellow that doesn't come through true in the pictures - these were brilliant porn-slapper reproduction shirts. They also made it quite easy to see any one of us from 50 yards away. Since Rico looks like he could be the supervisor for a pornslapper crew, many people stopped to ask us for directions to various places, assuming we were locals who were on duty. One guy offered to buy one of the shirts, but Tubbs' $50 price quote turned him away. Of course there was also an endless array of morons who would stare blankly at us and ask "What's the deal with the shirts? Bachelor party or something?" Which would inevitably result in one of us giving a smart ass reply about either 1) how smart that person was or 2) that no, these were just our work outfits.

The Mirage put me on bajungi tilt with a merciless 90 minutes of pai gow punishment in which I think I set a record for number of pai gows by a player. For those who don't know, a pai gow is when you make no pair with your 7 cards. It's not a good thing - unless the dealer has one. So I'm getting ground down in brutal fashion, and I decide to hit the roulette wheel with the remainder of the pai gow buyin, where I sat down to pound out 7 straight spins betting the 10 and the 8. After the 7th spin I'm felted, and get up since I see the Carnegie crew returning, easily visible due to the pornslapper shirts. I wander over to talk to Tubbs, as Big Show walks right past me to the roulette table I'd just vacated, just in time to see the number 10 come up. Steam coming out my ears now, I place my remaining chips from my pocket ($175) on black, and watch the spin come up red. Felted again.

Big Show and I decide to hit the Mirage double deck blackjack game. Although it's not a pitch game (where they pitch the cards to you face down, like we prefer), it was only 5 feet away, so we settled on it, since it still has decent rules. You wouldn't believe how many blackjack games in town now pay 6:5 on blackjacks. Originally, this was just a single deck blackjack phenomenon, but as a dealer at the IP explained to us later that evening, Harrah's has used O'Shea's as an experiment to see how its player base would react to the poor payout odds. Not surprisingly, since the crowd at O'Shea's is a lower end crowd who probably doesn't give two shits about odds, they didn't care at all, and Harrah's extrapolated that decreased payout structure throughout its other casinos. You can now find 6 deck shoe games that pay 6:5 at all Harrah's properties! Amazingly, these games still have people sitting at them, even though the house still offers sparse 3:2 payout tables interspersed amongst them. I viewed this as another severely bearish channel check: once you get to the point where you are crushing your customers so badly that they don't even care, it's a sign of impending doom. As the saying goes, "you can shear a sheep many times, but you can skin him only once." The fact that 6:5 blackjack is running rampant is a bad thing, as it is illustrative that you're down to the bottom of the barrel in terms of customers. Once you wash out the last customers, there's no one left. Anyway... Tubbs countered with a bullish channel check that the Mirage, despite cutting orange juice costs, still had Quilted Northern toilet paper in both the rooms, AND in the general population crappers in the casino. This pleased him greatly.

So Big Show and I sit down to play some face up double deck, and I'm down $800 within 30 minutes. Steaming, I wander into the "Baccarat Lounge" in my fluorescent yellow pornslapper shirt, and spot a black chip table that's empty. I quickly retrieve Big Show, who of course has the same obnoxious shirt on, and we sit down to rip up some cards at baccarat. As soon as we sit down, a maniacal Filipino sits down with us. This is potentially problematic, since in Baccarat whomever has the highest wager on each side (player or bank) gets to handle the cards for that hand. We didn't want to have to get into a bigger dick contest with this guy, so we held off for a minute. Fortunately, he was insanely superstitious, and would decide to take a hand off every few hands, where we jumped in and ran off a string of 5 winning hands. Then we just waited until he placed his bet, and took the other side of him, causing him to cackle like the villain in a James Bond movie and narrow his eyes at us as if we were the enemy, before cackling loudly as he turned over a string of natural winners. At one point Big Show had a $100 bet out, and MP (Maniacal Filipino) pushed out a $105 bet, in order to control the cards. Needless to say, this is horrendous etiquette, and I chided Big Show for not upping it to $110 in a declaration of all our war.

We channeled our inner Escobar, and asked the dealer to expose the cards one at a time. "One card please... and the other," so we'd know what we'd need to squeeze out to win the hand. On bajungi tilt and all-in again, I was up against the ropes, needing a miracle. I squeezed my second card and found paint - a king that didn't help me. I instantly ripped the card in half right down the middle which drew a gasp from the dealer and the 3 pit personnel who were standing by the game. It was as if I'd taken a dump on the table. "Uh oh," I muttered to Big Show, "I didn't think it'd rip that easily," as he was choking back laughter. The dealer chided me "PLEASE don't rip the cards," as they summoned supervisors to deal with this violation. After a brief huddle, the pit boss went to the drawer and pulled out a sheath of clear tape, to TAPE the card back together before throwing it in the discard slot, as I tried not to laugh, despite my severe tilt at having steamed off another dime at the baccarat table.

A different Asian pit boss retrieved some information, then calmly approached me to ask, "please, Mr. Dynamite, if you would be so kind as to not rip the cards in half." "Of course, I'm very sorry," I apologized, as I felt Big Show's chair vibrating from the laughter he was trying to quash. I received a text from Dirty Dave that read: "Just booted, rally questionable." I replied, "Just dropped a quick 17 hunge," to which he begged, "PLEASE tell me it was pai gow!"

Felted, I sat with Big Show for another 20 minutes, before we got up to return to his room with Tubbs and Connor to see if we could make any more sense of the end of the prior evening. Connor had no recollection of walking out of Encore, repeatedly begging me to punch him in the arm. Big Show recounted how he woke up in the middle of the night to find Connor in Tubbs' bed, and Tubbs missing. Surprised, he went in search of Tubbs, and found him lying passed out face up on the bathroom floor. Smartly, Big Show simply stepped over Tubbs and took a leak before returning to bed.

Since it was Big Show's bachelor party, we had obligatorily set up a quick assault on the Spearmint Rhino - an afternoon hit and run before dinner. The Rhino's limo-bus picked us up, with the limo driver taking a moment to pause at this group of 10 scrubs in pornslapper shirts, admitting, "this should be interesting." Tubbs had called earlier to confirm that their dress code consisted of no "plain white t-shirts." "These are definitely NOT white," Tubbs reasoned with me, and I couldn't help but concur. The Rhino offered the best deal in town - $100 bottles of liquor before 8pm. While we're EV hounds, and normally wouldn't pass up an opportunity to pay $100 for a bottle that is normally at least $450 (or $30 retail, depending on how you look at it!), everyone was too beat up from the night before to want to drink more quantities of hard liquor at this time, so we settled for light beers.

Being one of Big Show's groomsmen, I bought him a dance with a tall young lady. As she came over to me to collect payment, I asked, "How did it go?" "I think it went well," she answered, before turning to Big Show, a chair away, and saying, "How was is?" Big Show was polite, "Not bad." "On a scale of one to ten?" She probed. Big Show, a master market maker, pursed his lips, tilted his head, took 4 seconds, and loudly replied, "SIX."

Had I been drinking at the moment, I would have choked on my beer and thrown up right there. Instead, I merely let out a surprised hoot (more of a "guffaw," I guess), as this was like a slap in the face to this girl who clearly thought she warranted a ten. She tried to gain more info about what was wrong with her performance, and I clearly recognized that this was our signal to begin rallying the troops to head home.

We returned to the Mirage and showered up, ditching the pornslapper shirts for nicer dinner wear, and re-convened on the casino floor to head to dinner at BOA Steak in the Caesar Forum Shops. Dinner was solid - Tubbs had set up a fixed price menu for us, recommending that we go with the bone-in ribeye to "maximize value." Exhausted, Big Show and I each nodded off briefly at the dinner table, before rallying and roaming out to check out the Saturday night action on the strip. We meandered through Harrahs, where there was a lot of action in the outdoor party pit. There was a guy making those cool 5 minute spray paint art designs, who we stared at for a few minutes, before proceeding to the Imperial Palace.

I knew I had a problem brewing, as my stomach was killing me. There are lots of usable bathrooms in casinos on the strip, but I was in no man's land. The IP is flat out awful, as is Harrah's. The Bellagio and Caesar's were at least a 25 minute walk away - time I didn't have. I sucked it up and faced the wrath of the general population crapper in the back of the IP's casino floor. If you've seen Trainspotting, you know the legendary scene about "The Worst Toilet in Scotland." Well, that's what the IP is like. Surprisingly, I managed to snag some streak of luck, and found a remotely usable stall. While on the crapper, I texted Tubbs, Big Show, and Dirty Dave, "Taking a crap at the IP. Fuck My Life." Dirty Dave quickly responded, "So am I - I found a lower turnover facility on the 3rd floor outside the racebook. Still nasty!"

Emerging little worse for wear, I found Rico and Leeroux dominating a blackjack game, while Big Show and Tubbs were exercising some dice control at the craps table. Big Show came over to say hi to our favorite pit boss, the legendary Frank. "What's going on Frank?" Big Show inquired. "Just trying to get a look at those tits," Frank answered honestly, tilting his head at a customer in the slots pit 20 feet away with what Big Show described as "double K cups."

Financially and physically beat, I wandered back to the room to retire early at 2am, and prepare for my last day in Vegas.

Stay tuned for Part III


Tuesday, August 18, 2009

Vegas - Summer 2009: To the FELT! Part I


It's been entirely too long since my last trip to Vegas. Fortunately, Big Show's bachelor party provided an unavoidable opportunity to revisit the desert with some old friends. I had a 9:30am flight on Friday, and made it to the airport with time to spare. My former colleague, Sig, had explained to me that he always boards the plane last, watching everyone get on to see if there's anyone he should be keeping an eye on. I didn't need to scout the entire crowd - the guy sitting next to me was a dead ringer for the guy who plays the Jihadist bomb maker in the movie "The Kingdom." I called Sig for advice, outlining the situation. Sig told me that if the guy made a move toward the cockpit, I'd have to be ready to take him down. I explained that the guy was in a motorized wheelchair, but that I'd keep an eye on the situation.

I was more disturbed by the doucheball across from me with frosted Gotti tips in his hair, and the chooch a few seats down who was wearing a tank top, sunglasses, and a trucker hat tilted askew. Yeah, son, you're the toughest one around. You're so cool you wear your sunglasses inside. You know what the ladies like.

We boarded the plane - I had a window seat near the front. The flight was full, but the middle seat next to me remained empty for some time. I eagerly awaited the results of the "who is sitting next to me for the next 5 and a half hours" lottery, and hit the jackpot when I got the answer: a bona fide midget! Talk about a win - there would be no fighting for legroom today!

Arriving in Vegas, I breezed to the notorious airport cab line, expecting it wouldn't be a problem due to the early hour. There was no one in line, but I still paused for a moment when the line boss directed me to space number 13. Uh oh. Not a good omen, but I meandered on down and jetted over to the Mirage. I did my first channel check with the check-in clerk, asking him if they were busy that weekend. He eagerly replied that they were swamped, as if he was pre-empting my request for a room upgrade. That's what half price rooms will do - get the customers back! Slash the room rates and make up for it in volume? Anyway... I dropped my bags and headed to the poker room to await the return of Big Show, Tubbs, and Dirty Dave, who were finishing up a round of golf.

Rico was already in the room, dominating the big game - 1-2NL hold'em. I quickly obtained a seat at his table, and proceeded to rake $10 pot after $10 pot. Suddenly, a new guy sat down in the one seat, and pulled out a surgeon's mask to wear. My jaw dropped, but I quickly inquired, "Is that for you, or for us?" Wondering if perhaps he had swine flu and was being considerate. "for me," he mumbled through the mask. Look - I have no problem with old school grinders trying to make $40 a day killing time and playing 1-2 NLHE - I myself may someday get to that point - but if you're so miserable that you wear a mask to the table, then maybe it's time to find a new job/hobby.

Diego was hanging out on the rail, and shot Rico a text that said simply: "Mask? R U serious?" The golf crew returned, but Big Show and Tubbs needed a nap, putting me on tilt. I tortured myself in 1-2NL hell for another 90 minutes before demanding that Rico pick up and come with me to get some food. I didn't know yet that when I cashed out my remaining $85 in chips at the cage, it would be the last time I'd cash out any chips at any cage for the duration of the trip! Diego met us across the street at Chipotle, where we refueled before going to chill out at the pool for a while. Diego is from San Diego, and Rico is Mexican (just kidding, Rico - I know you're Puerto Rican), so they didn't really understand why a pale White boy like me wanted to sit in the shade, but they obliged. If the freak with the mask at the poker table wasn't odd enough, there was a dude at the pool wearing a wetsuit. Did I mention it was 105 degrees? Literally? A fucking WETSUIT at a pool in Vegas! AIYAHHH!

When the bachelor and best man finished their beauty rest, they rejoined us in the PaiGow pit, where we took over a $10 table. There was another table 6 feet across the pit from us that was stocked with a bunch of young guys from Boston, which resulted in a continual chorus of loud and emphatic "PAI GOW" exclamations from each of our tables. Rico put me on bajungi tilt when he turned over a hand consisting of AAAAKKJoker. Unfortunately, the Mirage PaiGow has no fortune bonus, which would have resulted in a 400-1 payout for Rico's 5 aces. Instead he won $10, minus a 5% commission. FAHHHHHK!

Dan joined us, and regaled a tremendous story of how he spent the prior evening: He'd met a girl at the Stratosphere (!!??!) and was on his way back to her room. As they got out of the elevator, she started shouting "White Power!" Dan paused, but figured he didn't need to bail yet. They got to her room and were hanging out, smoking and drinking. Some "friends" of hers stopped by - both male white supremacists from Utah. When the girl went to the bathroom, one of the dudes turned to Dan and advised, "bro, wear a condom." This was the point where Dan decided to bail - good decision sir. It's not every day that one lands a militant racist with STD's at the Strat. Sigmas!

We returned to our rooms to clean up and put on our party shirts for our night at XS, the hot club at Encore. When Big Show had explained that we were doing the club night Friday, not Saturday, I was skeptical - as some of the guys weren't even getting in from the East coast until the time we needed to be at the club. Big Show had this one correct though - we can no longer do two blow-out nights at our age, so the club on the first night was definitely the shot - even if it would render us useless for the rest of the weekend.

Big Show's former boss is a Vegas high roller. I'm talking 7 figure line of credit high roller, so when his assistant helped us with the table rezzie, we expected to be set up nicely. Of course, it never works out like that, and our host, Guido DeGuido passed us off to one of his underlings to walk us to the table. (note - this surprised me, usually the host takes you himself - I'm not sure what's up with XS's hierarchy of hosts/seaters/etc). So the guy walks us through the club to an outdoor table which was pretty subpar. We emphatically declined the table, explaining that it was not up to our standards. He said we'd have to talk to the host. "Ok, go get him," Big Show replied, but we were told we'd have to text him. THIS is why the system makes no sense - OR it's exactly the point of it - they figure you'll just give up and take the crappy table. Big Show explained via text that we would not be taking the crappy table, and the host sent another chooch to offer us another subpar table. Again, we declined, but they told us we'd have to start here, unless we wanted to triple our bottle commitment, which currently stood at 4 bottles for our group of 10. Refusing to settle for less on his big night, Big Show used some alternative sources, and we eventually secured an upgraded prime table for a total of 6 bottles plus a nickel for the host.

XS is a mammoth club. It's got a huge outdoor section, I discovered, as we had to step away from our table to smoke cigars. We were adjacent to the dance floor, so our table was quite loud, which was fine, as loud music does not impair one's ability to pound vodka. After a mere 90 minutes or so, we had a slight problem, when one fringe member of our party handed a plastic baggie with a shroom in it to another member of our party. Now, I don't do shrooms, never have, and don't want to - but I especially can't comprehend the desire to do hallucinogenic drugs in a scene like this - with super loud music and flashing lights. Anyway, the bouncer spotted this, and alerted security - the clubs do not fuck around with people doing drugs in the open - it gets them shut down and kills their cash cow.

I returned from the bathroom to find the bouncer by our table. Being the most diplomatic, I tried to ameliorate the problem. He explained that they'd seen someone passing drugs, and that they were closing out our tab and kicking us out. In reality, all they had was an empty plastic bag. After some calm negotiations, with me knowing that the dance floor bouncer is absolutely NOT the one who'd be here if they're going to shut down the table, he retreated to talk to his superiors, and returned with the settlement that the guy with the drugs (which "the head of security has confirmed are mushrooms") would have to leave, but that the table could stay. Shroomboy calmly exited, and we resumed our attempts to polish off 6 bottles.

At some point, there was a substance that looked like a spilled white russian on our booth cushions. I didn't see anyone boot, but we had no white russians... Tubbs later explained that he thought someone puked into our booth from the outside of it - leaning over the side. I'm not convinced it was puke as there was no smell, and no chunks (too much information?) but the busboy quickly appeared and wiped down the cushions, then reverted to the age old solution of flipping them over. Four bottles deep, around 2am, we were getting sloppy, and managed to dump our entire table over. Fortunately, Tubbs had secured the caps, and we didn't lose a drop of vodka - only our mixers, which were quickly replaced with a fresh setup.

Around 2:30am, roughly, I think XS must have sprayed some vaporized drug through the air, because everyone in the club went bonkers. Girls were suddenly grinding their hips in the air, perched atop every available space, like they were trying to hump a unicorn. Big Show, Tubbs, Leeroy and I looked at each other, shrugged, and ordered up 6 more bottles of water. Somehow, our drug kingpin managed to get back into the club and returned to our table, with a new hairstyle and change of shirt. Within 15 minutes, he'd knocked over our entire table AGAIN, where our last bottle had just been opened. Again, Tubbs, guardian of the liquor, had demanded that the top be secured, and we salvaged the entire bottle. Miraculously, they still didn't kick us out, and brought us another setup. We knew we were on borrowed time now, and quickened our pace, polishing off the last of the bottle when Dirty Dave pulled his classic move and poured the last 6 ounces into an empty Fiji bottle. This would come back to haunt us a few minutes later.

As we exited the club, I explained to Tubbs, "I could drive home right now," as everyone else was absolutely STAGGERING. It turns out I was not nearly as sober as I thought - the thumping music and lights had dulled my perception, and when I got out into the real world I had to do a few quick swallows to keep from booting in the bushes outside Encore. Big Show's most impressive skill is his ability to flawlessly negotiate every casino floor to get where he's going, but at 4am Saturday morning, under the effects of enough alcohol to kill a donkey, his skills were impaired. It was like how when you give a spider LSD it fucks up his internal computer and he spins a wacky web - Grey Goose and Ketel One rendered Big Show's casino maze negotiation gland moot. "KD - how do we get out of here?" He pleaded with me, as I led the way, staggering along the wall. Connor, in search of water, grabbed the bottle of Fiji from Tubbs, and took a big swig. He quickly turned and spit the mouthful of vodka into a plant in the atrium shops between Encore and Wynn. Talk about a rude awakening - expecting water and getting vodka.

Rico and I elected to walk back to the Mirage, as the others took a cab. Thoroughly annihilated, we headed straight to our rooms, and passed out. Saturday morning at 11am, I staggered out of bed to shower up and revive. Big Show hit me with a text that summed up the prior evening perfectly: "How did we get home?"

next up: Part II.


Wednesday, August 12, 2009

The Fed Manipulates Stocks

Must read piece today from The Atlantic, "The Final Days of Merrill Lynch."

Just when you thought that the insane saga of BankAmerica's acquisition of Merrill Lynch was fading back into the shadows, this piece comes out and reinforces the insanity of the situation. Ken Lewis's behavior almost has to be illegal in one way or another. The fact that he failed to disclose the Merrill losses to his shareholders is inexcusable, even if it was under duress from the Fed and Treasury, and for the good of the system.

I don't know if the following revelation is news - it's certainly news to me:

"Although this new deal with Treasury and the Fed could not be completed by the time the merger was to close on January 1, Lewis told his board he had received an oral commitment that the capital infusion and toxic-waste removal would be in place by January 20, the day Bank of America was to release its 2008 earnings report. Lewis said Bernanke told him, “We view you as strong and having acted appropriately in difficult circumstances … We’ll make sure you continue that way … We want to do something that when the public hears about it [the new government financing], your stock goes up.”

I mean - WOW. Am I the only one who gets fired up when I read that? Bernanke is quoted here saying that he will offer Ken Lewis a quid-pro-quo to help his stock price. Wow. The Fed, Treasury and the Government should not be in the business of controlling stock prices. That's one of the biggest mistakes they've made in the bailout proceedings so far - starting with the desire to hide which firms were in the most trouble by forcing all the big boys to take TARP dollars, and continuing with the fact that they STILL have not forced bank bondholders to subsidize the losses (by converting debt to equity) that the taxpayer is instead being asked to fund.


Monday, August 10, 2009


I wish the government would explicitly say that no firm that pays back TARP monies will get a second chance at a bailout in the future. Perhaps this would quell some of the populist anger that's going around at Wall Street right now, under the logic that the big boys are still gambling with taxpayer dollars. Even if firms have paid back TARP money, there is still the impression amongst the public that these firms are willing to continue to take significant risks because the government will always be there for them again if the shit hits the fan. The populist anger is justified - and it's absurd that the Administration didn't install some rules (like: no second chance for you!) for the guys paying back the TARP dollars.

Unfortunately, it's probably also an impossibility that the authorities could make such a promise that they'd let firms fail. Since we haven't really reformed systematic risk modulation, the government can't tell Goldman that they're on their own if they fuck up.

Here's what I've been reading for the past few days:

MISH on Bernanke:

"About a week ago Calculated Risk wrote "I'd like a doctor who never gave up trying for a cure, but I'd prefer someone with better diagnostic skills."


Praising Bernanke now is like praising a doctor for nearly killing your son because he finally guessed right on the fourth guess (in this case assuming that the right medicine has finally been prescribed, which is debatable)."

And Dean Baker on Bernanke:

"Saying that you didn't give us another great depression is not exactly a winning re-election slogan."

FNM's earnings:

"Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment...We are experiencing increases in delinquency and default rates for our entire guaranty book of business, including on loans with fewer risk layers. Risk layering is the combination of risk characteristics that could increase the likelihood of default, such as higher loan-to-value ratios, lower FICO credit scores, higher debt-to-income ratios and adjustable-rate mortgages. This general deterioration in our guaranty book of business is a result of the stress on a broader segment of borrowers due to the rise in unemployment and the decline in home prices."

On the unemployment data: Calculated risk has a terrific chart of the employment/population rate, which is important because declining "labor force participation rate" skewed the unemployment rate lower, even though we still had sizable job losses. EconomicPicData explains the numerical shenanigans clearly:
"How does this work? The numerator in the unemployment rate is unemployed... the denominator is labor force. Simplified example:
  • 19 people are unemployed out of 200 in the labor force = 9.5% unemployment rate
  • 1 of those unemployed individuals leaves the labor force
  • 18 people are unemployed out of 199 in the labor force = 9.0% unemployment rate"

Bailouts: "From each according to his ability to each according to his lack thereof." How "Atlas Shrugged."

Rolfe Winkler on Warren Buffett:

"It takes remarkable chutzpah to lobby for bailouts, make trades seeking to profit from them, and then complain that those doing so put you at a disadvantage"

Finally - good news for my long time readers: I'm going to Vegas this weekend for Big Show's bachelor party! I haven't been since the day Lehman went bust - so I'm due, and it's almost guaranteed that I'll have a blogworthy trip report next week.


Wednesday, August 05, 2009

Mish Mash - Quality Readings

The Dude texted me today to chastise me for not blogging enough. Unfortunately, our computer crashed, which leaves me to scamper to the laptop for quick intervals while my wife steps away or eats lunch, so I haven't had time to write anything of substance this week. If you want a conspiracy theory, our pc died after we shut it down to install Windows updates. Perhaps the government mandated that MSFT activate the doom switch during the software updates, so that people have to buy new computers and juice GDP... Even more conspiratorial was the fact that our warranty had expired FIVE days before the pc death.

Here's what I enjoyed reading this week:

MISH on Cash for Clunkers:

"All the program does is shift demand forward. Those clunkers were going to die at some point. Now sales are up this year which will cut into next year's demand, at the expense of everyone not getting free money.

Why anyone should be surprised at the "success" in generating demand for free money is beyond me. There is always demand for free money. Yet, interestingly, everyone seems surprised by the "unexpected success".

If the government wants more "success", it can give everyone $4,500 for a car. Short-term demand will soar. But long-term demand for cars would crash for the next few years, taxpayers would be stuck with the bills, and valuable resources would be wasted on cars rather than productive assets.

Thus, the "absolute success" touted by AutoNation is in reality a tragedy. Handing out free money always is. Indeed, the more free money handed out, the bigger the ultimate tragedy. The housing crash is poof enough."

Floyd Norris on Trump: If The Donald can get credit, the credit crisis must be over!
"So why do I feel joy at the news?

If a casino company run by Mr. Trump can get credit, then the credit crunch must surely be over.

Have you defaulted on a mortgage loan? Or maybe two? Fear not. That leaves you with a better record than Trump casino companies."

Goldman's $100MM trading days
: 46 separate times in Q2 GS earned $100mm in trading (Across all products). Wow.

John Hussman on the markets.

"Such analysts have no intellectual difficulty with non-equilibrium concepts, such as “government resources” (which they seem to think is just money from heaven, but is in fact merely a redistribution) and “cash on the sidelines” (which represents a mountain of money-market securities that somebody has to hold “on the sidelines” until they are retired, because they were issued in return for funds that have already been borrowed and spent).

Such analysts are often able to do what we can't bring ourselves to do, which is to risk other people's financial security on raw price momentum, or on speculative themes that are contradicted by historical data, or that logically cannot be true.

If I knew we could speculate on these themes and still get our shareholders out unharmed, I would do it. But I don't know how. It's frustrating to have missed what has turned out in hindsight to be a significant rally. We simply have not had the evidence to say “Yes, the conditions we observe now have historically been associated with a satisfactory expected return, on average, given the risks involved.”

Martial Law in Alabama? Can't be bullish...

NY Mag - the Hot Waitress Economic Index

"The indicator I prefer is the Hot Waitress Index: The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.

A waitress at one Lower East Side club described to me what happened there: “They slowly let the boys go, then the less attractive girls, and then these hot girls appeared out of nowhere. All in the hope of bringing in more business. The managers even admitted it. These hot girls that once thrived on the generosity of their friends in the scene for hookups—hosting events, marketing brands, modeling—are now hunting for work.” A Soho restaurateur I know recently received applications from “a couple of classic Eastern European fembots. Once upon a time, these ladies must’ve made $1,500 a night lap dancing. At my place, they’re not going to make that in a week.”

Scott Locklin: The Three Stooges of the High Frequency Trading Apocalypse

"I’m pretty sure all this news buzz around the evils of “High Frequency” started with Joe Saluzzi, who appears to be a sort of liquidity provider himself. His fund, Themis, apparently manually gets the best price for his customers. At least, that’s what it looks like on their website. A noble profession, though very likely a dying one. It seems the “high frequency” guys are picking his pocket, because computers are better at finding liquidity than human beings are. Joe blathers on about a lot of things, and I don’t feel like picking apart all the points in his various white papers on the subject. Joe appears to have a lot of time to go on television and indignantly blather about the evils of “high frequency” trading, despite the fact that his company appears to do exactly what “high frequency” traders do. The only difference between Joe and his tormentors seems to be that firm does it manually and in slow motion. I can’t let his nonsense about “false trading signals” pass uncommented though. Since when is anyone entitled to “true trading signals?” Gee, Joe, I’m sorry your crappy old signals don’t work any more; maybe you should invest in developing some new ones? Joe would probably be better off staying home, learning C++ and figuring out how to deal with these high frequency fannullones on a mano de mano basis, you know, sort of like all the other shops like his are doing."